Private banks detect maximum fake notes: Finance ministry

New Delhi: Private banks operating in the country have detected and processed the maximum number of counterfeit currency instances in banking channels surpassing both public sector and foreign banks by a huge margin, an official report of the Finance Ministry has said.

All the banks in the country--private, public and foreign --and similar financial intermediaries are mandated, under anti-money laundering laws and other rules related to national security, to detect and send across such instances to the Financial Intelligence Unit (FIU) which is the premier snoop gathering agency for such instances in the country, under the control of the Finance Ministry.

The slow pace and low volume of compliance in this regard by public sector banks, which have the largest base of customers and investors in the country, have proved to be a matter of concern for the agencies prompting immediate remedial measures.

While the private banks contributed the maximum number of Counterfeit Currency Reports (CCRs) at 3,10,714, to the FIU during 2011-12, public sector banks detected and sent only 2,649 such reports during the same period, a latest report by the financial snooping agency said.

Even foreign banks operating in the country fared better with 9,273 CCR reports during the same period while other banking intermediaries too sent in 4,746 such reports, surpassing the public banks total volume of CCRs by a few thousands.

The FIU has approached the Reserve Bank of India (RBI) in order to get better results from public banks in this area of utmost concern which has ramifications related to country's economy and security.

"The compliance of the public sector banks continued to be low. The matter was taken up with the RBI to take steps to improve compliance by the public sector banks. During the review of the public sector banks, the best practices of private Indian banks in detection of fake Indian currency notes and reporting to FIU were highlighted," the agency's report stated.

A senior official said financial enforcement agencies in coordination with the Indian Banks' Association (IBA) have devised certain red-flag indicators to detect such currencies and ensure a hundred per cent compliance by the banks in reporting this to the FIU.

The FIU then sends these CCRs to various security and intelligence agencies for action on their end.

The private banks, according to the official data, have shown a constant streak of detecting the maximum number of CCRs over the years.

During 2008-09 they identified 29,846 fake currency instances in their channels, 1,15,720 in 2009-10 and 2,34,400 CCRs in 2010-11.

The corresponding figures for public sector banks during the same years were quite low.

During 2008-09 the CCRs produced by these category of banks were 396, in 2009-10 (1,391) and during 2010-11 (1,896).

A CCR is defined as a suspicious alert report which includes details of a single instance of counterfeit currency detected by a bank.

The FIU report did not, however, specify the separate volume of CCRs generated by a single bank but rather clubbed the banks under three heads of private, public and foreign.

A senior investigator in the Finance Ministry, when contacted by PTI over the contents of the latest report, said that security agencies both in the policing and financial probe domain have been asked to be "alert and alive" on the possibility of fake currency being used to weaken the country's economy and even being used to aid men and material involved in financing of terror-like instances in India.

A total of 3,27,382 CCRs were reported to FIU in 2011-12, while these reports stood at 2,51,448 during 2010-11, the report stated.